I’m at the roll-out of tonight’s UNC explanation of the tardy (a year late) Tischler-Bise Carolina North fiscal impact study.

The classroom at the School of Government is fairly packed with elective and governmental staff folks (about 45 from all three governmental bodies – Chapel Hill, Carrboro, Orange County). Beyond a smattering of media folks (Daniel with the Chapel Hill Herald, Jesse with the Chapel Hill News), there’s a handful of concerned citizens.

Other than those “required” to be here (if at least for no other purpose than to say they were there), some of the “usual suspects” include Penny Rich (former candidate Town Council), George Cianciolo (Chapel Hill planning board), Scott Radway (former planning board member), Joe Capowski (former Council member), Terri Buckner (former Tech board member among other civic posts) and myself.

28 responses to “Carolina North: The Hole in the Taxpayer’s Pocket Live ‘blog”

Tischler Bise consultant starts by covering methodology used to create fiscal impact study. A key difference, she underlines, between this and an economic impact study is that net revenues are not being balanced against net costs.

Base assumptions include growth trends as per 2007-2008 and governmental budgets based on 2007-2008 numbers.

Of course, this completely misses the boat as the current economic meltdown is a real game changer (something the Orange County Board of Commissioners didn’t account for in the recent revaluation debacle).

NO NEW STREETS, one of the major flaws. I and others have talked about how improvements in all modalities of transportation are required on every side of Carolina North to meet the putative goals set forth by the Horace-Williams Citizen Committee, Carolina North Leadership Advisory Committee and Chapel Hill’s development agreement.

Already we can project required improvements on MLK, Jr. and south into the Elkins Hill neighborhoods to support pedestrian and bicycle access to main campus.

I ask what was Tischler-Bise’s thinking in not considering off-site impacts of Carolina North on the cost structure of providing services like bike paths, pedestrian improvements, stream impact mediation (Bolin Creek and elsewhere), etc.

The T-B consultant became somewhat flustered and maintained those costs are built-in though, if you look at the study, the improvements are concentrated on the Carolina North property.

Back to schools. Barry Jacobs asked when the property for a new school would be designated. Jack Evans said he met with the school folks last week and there was an ongoing discussion on where best to site the school.

Scott Radway is asking into the indirect impacts of off-site housing growth as it pertains to the new revenue streams from property taxes. Wants to know how T-B distributed type of housing per location – Chapel Hill, Carrboro and Orange County.

T-B responds that type and location of off-site housing which indirectly contribute tax dollars to offset Carolina North costs are based on a study of University employees going back as far as 8 years.

They did a pretty good job covering this in their report but (BIG BUT) the scenario is fixed based on historical trends. Instead of exploring a range of scenarios – especially given the expected shifts due to the economic downturn – they have stuck with a static analysis that – as we say in the software business – is brittle.

Moving on T-B presents the employment profile for Carolina North over a 15 year horizon. In either case it is 3500+ jobs with the difference coming from when the jobs are created. These are net jobs – doesn’t include jobs shifted – like those at the Law School – to Carolina North.

Direct impacts – major delta – at least from Tischler-Bises’ analysis – is the fire station coming online in year 9 which creates a $12 million cost – roughly $800K per year over 15 years or 1.5 cents per $100 valuation (declining as Chapel Hill grows).

Other than the major hit Chapel Hill, it’s all gravy as T-B presents positive revenue impacts for both Carrboro and Orange County.

The fiscal impact study shows a net surplus of $13.8 million to Orange County. The cost of schools, I argue, is extremely sensitive to both macro-economic effects (as we saw from the energy spike) and socio-economic profiles (how many families with X number of kids, etc.)

The T-B evaluation expects that the folks living at Carolina North will have relatively small families requiring a smaller footprint school facility.

Mike Nelson asks about the two scenarios vis-a-vis housing. Scenario one has a balance of non-taxable to taxable housing of 250/167 and scenario two 125/250 (with, obviously, different revenue streams).

Mark Chilton pipes up on assumption of 3500 employees with only housing on-campus sufficient to accommodate 700 or so of them. Wants to know, given that folks say residential development is a net loss, where are the impacts of building housing to accommodate the 2800 other employees are…

Kevin Foy, question as to type and cost of Chapel Hill policing as reflected by the report. T-B says base assumption is that the policing required mirrors main campus, etc. Kevin challenges that assumption (something I did starting several years ago).

I’ve argued over time that Carolina North – which was originally promoted as a research campus for new projects, etc. was – in reality, in the short term – was going to serve mainly as an overflow campus for more meat-n-potatoes type development as characterized by the last 8 years of build-out on main campus.

Roger Perry, current head of the UNC Board of Trustees, argues that there is tremendous jobs growth outside of the main campus. If the growth doesn’t occur at Carolina North then it will occur elsewhere.

I would argue that growth is more diffuse than what is proposed at Carolina North – whose impacts are concentrated.

Jim Ward wanted to understand better about the student generation ration of 0.7 and the character of jobs on CN.

T-B jobs are university, support staff and private apportioned as per current projections.

Following up on Jim’s point – the outcome of the model is sensitive to the initial conditions. There’s a big difference between 0.7 student per family or X # of on-site white collar jobs versus UNC support staff that trundle around town in their blue/white trucks.

Dan is disputing that the revenues coming from property taxes from new development cannot be attributed to Carolina North exclusively – something I have mentioned before as a possible downside of the analysis…

T-B argues that Dan’s point doesn’t make sense – that you can apportion the residential growth to some extent – which makes sense as a traditional demand curve would dictate but since Chapel Hill and Carrboro are filling up – and, I hope, we won’t be building a solid wall of East54’s down MLK, Jr. – there is only so much supply that can be provided irrespective of the demand.

Mark Kleinschmidt pipes in that the jobs growth at Carolina North is a significant factor….

Funny that Mt. Bolus, my neighborhood, is once again well represented. My neighbor Jesse White and Jonathon House (former Mayor) are here.

Usually energy and sustainability experts Tom Henkel attends, which makes for a fairly concentrated attention from one neighborhood.

Ed Harrison, what is “earlier indirect impacts”? These are indirect impacts that are spurred by primary “indirect” impacts (kind of a cascading effect).

Ed points out that there is only so much growth that Chapel Hill can accommodate – indirectly spurred or not. UNC asks the concentrated town staffs if there is room, sans Carolina North, to accommodate another 1200 units.

Matt Czajkowski, “you say the model is demand driven” but you didn’t look at the total capacity of Chapel Hill to grow?

T-B – no, we didn’t account for the growth or type of growth. UNC, there’s plenty of room to grow….

Matt – “there is?” Glad to see that this flaw was taken on….

Matt – “everday the Town council” struggles with growth, growth decisions – how can you not know what kind of and how much growth Town can absorb when claiming there will be significant positive cash flows from off-site property taxes spurred by Carolina North when you haven’t even figured out how many units the community can absorb…

Scott Radway – wants to confirm that the model can be used to do a sensitivity analysis. Points out that there is a difference between what growth the community’s can physically accommodate versus politically accommodate.

Points out that the %15 affordable units are not part of the 1200 projected offsite units. These units will generate a different level of property taxes.

He wants, like I and others do, more detailed background information on the assumptions, how the assumptions were settled, etc.

Beginning to wrap up. Essentially I was hoping that T-B would provide more detailed background on how they settled on key assumptions, set key input values for the fiscal impact model used for Carolina North.

Instead they didn’t have ready answers – like on growth capacity – that would build confidence in this report.

The problem is that the current schedule for approving a development agreement doesn’t have enough time built-in to tweak the model or fill in the major gaps in the assumptions.

Not quite an “epic fail” but not the confidence builder I thought it would be…